Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.

Weekly Briefing

Weekly Briefing: speculation around tax cuts & ISA changes ahead of the Spring Budget & a strong start to the year for the UK economy

This week, we look at new business activity data which points towards a positive start to the year for the UK economy, speculation surrounding possible Inheritance Tax (IHT) and income tax cuts to come in the Spring Budget, and more. 


UK Economy

Strong Start To 2024 For UK Economy Despite Recession

  • The UK economy started 2024 off strong despite falling into a shallow recession at the end of last year, new figures suggest. 
  • Business activity bounced back at the beginning of the year, with S&P’s Purchasing Managers’ Index (PMI) – which measures private sector activity – climbing to a nine-month high of 53.3. 
  • A figure of 50 or above indicates growth, whilst anything below the 50 mark signifies contraction.
  • This was the second consecutive month that the PMI exceeded expectations, with a reading of 52.2 in January.
  • February’s PMI follows stronger-than-expected retail sales in January as sales volumes jumped 3.4% after a steep fall in December. 
  • Meanwhile in Germany, a deepening downturn in the manufacturing sector saw business activity contract at its fastest rate since October, dropping to 46.1.


Spring Budget 2024

Chancellor Considers Lifetime ISA Changes

  • According to Politico, the Chancellor is strongly considering reducing the 25% Lifetime ISA (LISA) penalty to 20% in his Spring Budget, and increasing the maximum property purchase value to £500,000 to reflect house price growth is also on the table.
  • Under the current rules, if you’re aged between 18 and 39, you can open a LISA, save up to £4,000 each tax year and receive a 25% bonus of up to £1,000 from the Government. This can go towards a deposit on a house, as long as the property costs £450,000 or less, or alternatively towards retirement. 
  • But this £450,000 limit has been frozen since the LISA’s introduction in 2017, whilst house prices have risen by 29% in that time. 
  • In a January episode of The Martin Lewis Money Show Live, Lewis challenged the Chancellor over the Lifetime ISA’s £450,000 limit.
  • Campaigners, including Lewis, have called for the £450,000 limit to be raised or the 25% withdrawal penalty – which LISA holders must pay when using their LISA savings to purchase a non-qualifying property, such as one priced above £450,000 – to be decreased or scrapped altogether. 
  • In the episode, Hunt responded to a viewer’s comments that he’d been priced out of using his LISA without penalty due to rising house prices, saying: “Well, look, I've now started to make my plans for the Budget, which is on 6th March, and I absolutely hear what you say on that. And, you know, consider the Chancellor properly lobbied on that point.”

What Are The Chances Of Tax Cuts In The Spring Budget?

  • With Chancellor Jeremy Hunt’s Spring Budget just around the corner, there has been much speculation around what’s to come, particularly regarding potential tax cuts. 
  • MoneyWeek reported that the Chancellor has stated there’s less flexibility for tax cuts in the Spring Budget than there was in his Autumn Statement.
  • However, the latest public sector finances data shows the Government had a record £16.7 billion surplus in January, the largest since records began in 1992, with MoneyWeek suggesting this could leave some room for tax cuts.
  • Cautioning that the surplus figure is still behind the Office for Budget Responsibility’s £18.2 billion forecast, Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, said: “It offers a few inches of headroom for Hunt, but not enough for a Budget of dramatic tax cuts.”
  • One suggestion is that the Chancellor may reform IHT by cutting the rate from 40%, increasing the IHT-free threshold, or even the abolition of the tax altogether. 
  • Cuts to income tax have also been suggested, after Prime Minister Rishi Sunak promised to reduce the basic rate of income tax during his 2022 leadership campaign.
  • Nonetheless, with the expectation that significant cuts to taxation are unlikely, it’s important that investors consider tax incentives – such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) – to help make their money go further. 

A Final Note

Speculation surrounding upcoming tax cuts and ISA changes is clearly heating up ahead of the Spring Budget next week. 

We’ll be eagerly awaiting the Chancellor’s Budget on 6th March to see if much-anticipated IHT reforms come to fruition and what is in store for the ISA market – make sure to keep one eye on your inbox.

At GCV, we remain committed to providing the latest insights into the investment and wider economic landscape in order to support investors in making well-informed decisions when choosing where to allocate their capital.

If you would like to find out more about a number of tax-efficient investment strategies available to UK investors, discover our range of downloadable resources here.

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Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.